What Is A High Asset Divorce?
A high asset divorce attorney in Newport Beach understands that marriage dissolution can be traumatic for both parties. A high asset divorce, sometimes called a high net worth divorce, generally happens when one spouse has a significantly higher financial standing than the other. It does not necessarily mean that one has more money, but it also considers properties with high value, like interest in a closely held business, trust funds, or multiple homes. This difference in financial standing can be caused by various factors such as inheritance, businesses, or some investments.
People spend a huge part of their life building their careers and accumulating wealth. This could play a big role in making divorce procedures more gruesome and complex since there could be high-value marital properties involved. It is vital to understand what assets need to be considered and the procedures that would follow to not make the experience any more unpleasant. Seeking the assistance of an experienced High Asset Divorce Attorney in Newport Beach is a critical part of the entire process to achieve a more favorable result.
High Asset Divorce VS Typical Divorce?
Every divorce has its own set of challenges that must be dealt with but what makes a high-asset divorce different is the value of the properties involved. A high asset divorce occurs when spouses possess high-value assets worth more than $1 million.
Every divorce, regardless of whether it is a high asset or not, takes into consideration some of these factors:
- The marital property and how it is divided.
- Spousal support.
- Child support and custody.
- Visitations.
- Other financial considerations.
While both types of divorces generally have the same procedures, a high asset divorce becomes understandably more complex because of the additional assets that have to be taken into account. In every divorce, ownership of properties must be appropriately determined and distributed. When one or both of the spouses own many high-value properties, the amount of time and resources that have to be put into it just normally increases. There could also be more tension between the spouses in a high asset divorce because one may have a higher chance of losing some properties.
With the high value of properties a spouse owns, it is important to organize assets to avoid making grave mistakes. Assistance from an experienced divorce attorney is essential to ensure a smooth sailing proceeding.
What Assets Are Divided?
Property division is an inevitable part of the divorce process. Which assets must be divided and who gets what?
Divorce in California can be different from some states since it is a community property state. This means that generally, spouses equally own assets acquired by either of them during their marriage.
Community property is defined by California Family Code section 760 as, “all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in the state.”
Community property is:
- Anything you earned during the marriage.
- Assets bought using money earned during the marriage.
- Liabilities you acquire while married.
These assets can include cars, furniture, real estate, or even artwork. Couples who spend many years together may acquire a large number of properties. These will be considered community property and must be equally distributed between the two parties in a divorce. Properly identifying these assets is essential to avoid any unnecessary disagreements. The assistance from a high asset divorce attorney in Newport Beach can help you go through this process smoothly.
Community Property VS Separate Property
Separate property is simply defined as an asset that is owned by one spouse but not by the other. This consists of anything that a spouse has obtained outside the marriage. As distinguished from community property, separate property is exempt when dividing assets in a divorce.
Separate property is:
- Anything owned by a spouse before marriage.
- Property obtained after the separation from a spouse.
- Anything received as an inheritance or gift while married.
Let us say your mother has left you with a property, regardless of whether this happened before or during your marriage, it will remain part of your separate property. This remains true even for income earned from an inherited asset. Revenue gained from an apartment building that was transferred to you as an inheritance will still be part of your separate property.
Any property purchased using separate money also falls under separate property, regardless of when the purchase happened. For example, a vehicle bought during the marriage using the money you have earned prior to being married exists as a separate asset. Rent income from real estate owned before the marriage is similarly identified as separate property.
Things can get even more complicated when community property and separate property start to mix. One example is when a couple buys a real estate property and uses a spouse’s separate asset as a downpayment but pays the succeeding installment payments using money earned during the marriage. Since both separate and community property are used to purchase the house, there is now what is commonly called, “commingling”. The asset will be part of the commingled property and may require the expertise of an experienced forensic CPA if one of the spouses wishes to “trace” this asset. Obtaining help from divorce attorneys in your area can help you be acquainted with such experts.
Things To Consider In A High Asset Divorce
The division of assets is not only an important part of any divorce, it is also what usually makes the divorce proceedings tedious and complicated. It is even more true for a high asset divorce where high-value properties are involved. Spouses must consider several factors to have a better understanding of what to expect.
It Is More Expensive
A high asset divorce in nature is more complicated than an average divorce. This is because the value of assets involved is significantly higher. Community properties like houses, cars, business interests, etc. that are part of community assets must be appropriately valued and taken into consideration. In high asset divorces, having one lawyer may not be enough. The complexity of the whole proceeding can require a team of experts that will carefully go through your affairs to ensure a smooth divorce process.
The expertise of property valuation experts may be needed in cases where high-value assets are involved. There are situations when each spouse hires their respective experts to ensure their separate interests. When community and separate properties commingle or when a spouse has reason to believe that the other is hiding some assets, the services of a forensic CPA might be required. These can significantly increase the cost of the whole divorce proceeding. However, these expenses prove to be necessary especially when a large number of high-value assets are involved.
Spousal Support
In a high asset divorce, the likelihood of one spouse having a significantly higher financial standing than the other is high. Determining who is the payor and who receives the support can greatly influence the living standard of both spouses. California Family Code has listed factors that can be considered when calculating spousal support in a divorce in California. Some of them are:
- The standard of living each spouse has established during the marriage.
- Each party’s ability to maintain this standard of living.
- The assets and obligations of each spouse.
- The ability of the supporting spouse to pay for spousal support.
- The duration of the marriage.
- The tax implications for each spouse.
A judge normally makes decisions based on these factors to determine which spouse is awarded the spousal support. There are two types of spousal support.
Temporary Spousal Support
It happens when the court orders one spouse to provide monthly payments to another spouse while a family law case is ongoing. The spouse with a low income has the right to immediately ask for temporary spousal support as soon as the family law case is filed. It happens in cases when the high-income spouse leaves the family and the other is left with not enough money to maintain their current standard of living. A judge will award one of the spouses with temporary spousal support and the payor spouse will have to immediately comply.
Couples initially agree on the amount of support, but a judge can intervene in cases where spouses don’t agree. Disagreements between the parties may arise and the payor might refuse to provide support. If so, the court can determine the amount of spousal support that has to be awarded to the low-income spouse. Naturally, if the financial situation of either of the parties changes, they may choose to ask a judge to adjust the amount of support or decide to end it.
Long-Term Spousal Support
Once a couple finalizes a divorce, one may pay or receive long-term support. Many divorces end with neither of the spouses paying this type of support but it is still common when the following factors exist:
- One spouse has a significantly higher number of assets than the other.
- The marriage was at least 10 years long.
The length of long-term spousal support, or what is sometimes called permanent support, varies and there is often room for negotiation. It can last for as long as half the length of the marriage or even longer. The amount and length of long-term spousal support can change depending on each case, but the discretion mostly lies with the judicial officer.
A high asset divorce attorney in Newport Beach can walk you through the factors that influence the value and length of long-term spousal support or permanent support. An accounting expert can also assist in analyzing and discussing any possible tax implications.
Takes Longer Than An Average Divorce
When going through a high asset divorce, it is important to remember that the procedure to evaluate properties involved takes a longer period of time. One of the main reasons is that it will take a considerable amount of time to accurately calculate all high-value properties that have to be considered in the divorce. The proceeding can take months, or even years, depending on the number of high-value assets. It is crucial to remain patient to avoid unfavorable results like losing an important property.
For spouses who own a large number of assets, bigger issues can even arise. One spouse might decide to hire a separate property valuation expert from the other and this can lead to disagreements between the parties. The process of settling these conflicts can lengthen the amount of time it takes to conclude an entire divorce proceeding.
There are also cases when a spouse is tempted to hide an asset from the other. The expertise of a forensic CPA might be required to avoid losing important properties.
Mistakes To Avoid In A High Asset Divorce
Due to the possibly long and arduous process of a high asset divorce, some couples tend to get themselves into difficult situations. However, they can hardly be blamed since the complexity of the divorce procedure can turn into an unbearable experience. To ensure a more tolerable divorce proceeding, spouses must remember not to do the following:
Failure To Consider Tax Implications
Things could get complicated even after the finality of a divorce. It is essential to keep in mind that there may be some taxes you will eventually have to pay. Properties after a divorce may be awarded to you and assets may have to be sold. All these will have tax implications that can become too troublesome if forgotten.
To avoid such mistakes, it is essential in some cases to hire an experienced accountant. A high asset divorce attorney in Newport Beach will work with qualified experts to ensure that your interests are protected well.
Hiding Assets
A high asset divorce can involve a large number of properties, some of which you might not want to let go of. It is very tempting to hide or mask some of them as part of separate property in an attempt to keep them for yourself. However, doing so can have serious implications. Hiding assets during a divorce proceeding can lead to severe consequences and can include jail time. Leaving out some properties for the courts to identify might also leave you vulnerable to accusations of hiding assets.
Sometimes, being too trusting can also lead to your spouse hiding some assets from you. For example, they can set up trust funds or gift money to friends and relatives who will return the asset to them after the settlement of the divorce. Some spouses might be tempted to do this to keep some assets they believe are important. Hiding these properties through this method may be difficult to notice unless one really looks into it. Hiring experts will help you go through this process with fewer things to worry about. Experienced divorce attorneys can assist you in seeking help from qualified experts.
Not Seeking Help From A High Asset Divorce Attorney
One of the biggest mistakes a person going through a high asset divorce is not hiring an experienced high asset divorce attorney. The procedure is not only long but also complex. Problems that are completely beyond your reach may arise. One example is the possible tax consequence after properties are divided between spouses. There are also issues with child support that will be better handled with an expert next to you. To ensure that no one is taken advantage of, it is vital to turn to someone well-versed in family law matters in your area.
Having a divorce attorney on your side can provide you with relief. You can be confident that all your matters are handled carefully. An experienced high asset divorce attorney in Newport Beach will have connections with qualified experts in the area. They are capable of creating a whole team of experts that will assist you in the entire divorce proceedings.
Probability Of A Contested Divorce
Not all divorces are contested but the probability may be higher in a high asset divorce because of its nature. People with high-value assets may want to ensure proper division of properties. Especially when the total amount of properties they can receive is far greater than the cost of legal proceedings. Issues may arise when spouses disagree about the valuation of certain assets. One party may choose a different valuation expert from the other when determining the worth of a particular asset. This could lead to some disagreements between spouses.
Some people have spent most of their lives establishing a good career to secure a certain standard of living. One does not simply want to let go of all that. Each spouse will be ready to fight for what they believe they are entitled to.
Working With An Experienced High Asset Divorce Attorney In Newport Beach Helps
A high asset divorce needs the expertise of a divorce attorney who understands the complexities that come along with it. The whole process can pose various issues that require the expert hands of an attorney that is experienced in handling financial assets.
The Moore Family Law Group in Newport Beach understands the difficulty and sacrifices a spouse takes to reach a certain financial standing. It is the firm’s primary mission to secure the interests of the family’s breadwinner. Moore Family Law Group’s experienced high asset divorce attorney in Newport Beach ensures that one does not suffer unnecessarily large support orders or less time with the children.
Family law matters should be handled with care, precision, and through strategic solutions. Moore Family Law Group’s legal team is standing by ready to protect your rights and fight for a win-win solution.